App purchases by Australian consumers on mobile and handheld devices

On 19 July 2013, CCAAC’s Inquiry Report on App purchases by Australian consumers on mobile and handheld devices was released.

It is evident that apps offer many benefits, including through their ability to increase the functionality of a user’s handheld device. However, CCAAC has also uncovered circumstances where consumers have experienced difficulties when purchasing, downloading and using apps. The prevalence and aggressiveness of in-app purchases for some apps has been a common cause for concern for consumer stakeholders.

CCAAC views this inquiry as only the start of the conversation. There is an ongoing need for industry, government and consumer stakeholders to continue to monitor consumer outcomes in this new market. It is hoped that CCAAC’s findings will help support further work in this regard. In particular, CCAAC has identified concerns relating to the refunds and complaints processes of some app stores and proposes a range of improvements that could be made. In addition, CCAAC considers that improvements could be made to the manner in which information is provided to consumers, including with regards to in-app purchases.

While CCAAC has not identified a need for additional industry-specific regulation, it acknowledges that regulatory options could play a role in improving outcomes for the community. It would be appropriate to consider whether there is a need to re-examine the issues in two years time. In this regard, CCAAC has written to industry stakeholders to encourage them to make some practical changes to their current practices and it is noted that some app stores have adjusted practices in advance of the release of this report.

On 5 November 2012, the Assistant Treasurer, the Hon David Bradbury MP, released the Terms of Reference.

Technology is evolving at a rapid pace opening new markets and creating new opportunities for consumers. Consequently, online markets associated with mobile and handheld devices are expanding. These markets allow consumers to purchase digital content (or applications, ‘apps’) such as music, movies, magazines, software programs and games. There are various options for downloading and using this content through the most popular ‘ecosystems’ and may also feature ongoing subscription-based and ad-hoc ‘in-app’ purchases beyond the initial free or paid download.

The Commonwealth Consumer Affairs Advisory Council (CCAAC) will conduct an inquiry into the experiences of Australian consumers with downloading apps, including free and paid apps, and making in-app purchases, on mobile phone and handheld devices.

Terms of reference

Under its terms of reference, CCAAC will examine the following matters as part of its inquiry:

the characteristics, features and trends of app markets in Australia;

consumer experiences when downloading and using such content, including when used by children;

adequacy of the information being disclosed to consumers about the costs associated when downloading and using this content before and after it is downloaded;

adequacy of existing measures to address any consumer concern, including the legal protections available to consumers, the adequacy of default settings to ensure consumers are making an active decision before incurring additional charges, the availability and ease of use of ‘opt out’ features, the adequacy of existing parental controls for app stores and how these controls are promoted to consumers, and any other industry initiatives; and

actions that can be taken by consumers, industry and governments to help improve consumer experiences when making in-app purchases, including international approaches.